Its own business model, not RBI curb, caps Bandhan Bank's growth prospects

In the days ahead, the biggest challenge for Bandhan will be to find the right way to dilute promoter share

Back in 2010, when Bandhan Bank was still a microfinance organisation, it could preempt the first ever crisis in the sector. An ordinance by the Andhra Pradesh government curbed nearly 70 per cent of the microfinance operations, followed by strict limits on lending and collections. 

The unregulated nature of the sector had led to lending at unreasonably high rates and coercive methods of payment collection, prompting Andhra Pradesh to promulgate the ordinance. Six months before the state had passed the ordinance, however, Bandhan took a step that few had contemplated: it reduced lending rates by about five percentage points --